Is the 'Minsky moment' upon us?

Steen Jakobsen

Chief Economist & CIO

In my latest Quarterly Outlook, I told readers that Q2 2018 marks 'the end of a cycle like no other', and the evidence supporting this view just keeps piling up.

From geopolitical conflagrations to de-dollatrisation, monopolies to credit impulse, the warning signs are all there: we are entering a period of markedly increased volatility.

At the centre of the conflagration lies the credit impulse. Ultimately, everything is about credit... and credit has stopped flowing. Beyond this key metric, we can also see that the profit impulse in the US is running in the negative – so two of three of the economy's key drivers are in sub-zero territory.

The price of money is rising, recession is coming, and negative credit impulse and yield curve readings represent confirmation of the trend.

For a look at some of the charts I consider to have the most explanatory power regarding this quarter and the coming storm, I invite you to download the recent presentation I made for South Africa's Sasfin.

 
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